> On Oct 17, 2018, at 5:54 AM, paul dove via EV <[email protected]> wrote:
> I read that Azure was mismanaged. Managers taking lavish trips and trying to
> expand into Europe.
We had some insight into the problems at Azure… Expanding into Europe seemed
like a pretty good idea under the circumstances (the gliders were coming from
Turkey, for instance), and I don’t know about lavish trips, that may well have
been the case, but I don’t think would have been a big deal relative to the
big-picture problem. Fundamentally, the problem was that Ford was both their
monopoly supplier and their monopsony customer, Ford knew that and left a
relatively small margin for Azure, but sufficient margin _if you were as
competent and knowledgeable as Ford_. But Azure was new, didn’t really know
what they were doing yet, and was simultaneously getting screwed by their other
supplier, Siemens. So they got a lot of orders from Ford, bought a lot of
gliders and the parts to convert them, had supply-chain problems with Siemens
and growing pains with scaling up production internally, which meant that they
were tying up more and more money in parts sitting on the shelf and in
not-yet-complete vans, and getting very little money back from completing and
shipping vehicles. Eventually that killed them. Too much money in inventory,
too much money going out to buy more inventory, not enough cash coming in from
sales, even through there was an already-booked-sale for every new glider they
bought.
Viewed a different way, average-time-to-produce-a-van kept getting longer,
rather than shorter, and that (quite reasonably) wasn’t part of the business
plan.
-Bill
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